Rohit Joshi & Siddharth Tak/Zee Research Group
Politicians cutting across party lines have made a fervent pitch for ushering transparency in reporting of inflation data while calling for a total revamp of the current measurement system of retail price movement of essential commodities in the country.
The demand comes in wake of the latest hike in fuel prices, sixth in case of petrol in last three months by Rupees 2.35 per litre last Saturday. Diesel prices too were increased by 50 paisa per litre.
Yashwant Sinha, former finance minister and senior BJP leader told #BBV Bharat Bhagya Vidhata on Zee News that the inflation data revamp was mandatory. “Wholesale Price Index (WPI) is not relevant for the consumers as people don’t buy products at the wholesale level. Inflation and that too the retail inflation (measured by CPI) has increased significantly from the fiscal 2008-09. Approximately from 2009-10, the food inflation part of CPI has remained at levels of nearly 10 per cent or more,” he explained.
Zee Media produced #BBV series focuses this week (Sept 2-8) on redeeming India of price rise bringing in all the relevant stakeholders together on one of the most vexed issue faced by 125 core people in the country.
Oscar Fernandes, union minister for surface transport and highways, too saw merit in the argument calling for a revamp of price data collection and reportage. In his ‘Nishane Pe’ BBV interview to air on Friday, September 6, he, however, asserted that the inflation would be brought under control and that the government through the Food Security Bill would offer essential food items at a highly subsidized rate.
India’s biggest macro economic challenge in recent years has been high retail inflation. During the ongoing regime of the UPA government, there has been a multifold rise in the retail prices of essential commodities. In the last nine years (since 2004 when UPA government came to power), price of moong dal, tea, sugar, milk, petrol has surged by 233 per cent, 158 per cent, 157 per cent, 129 per cent, 115 per cent respectively.
The former finance minister in the NDA regime held the Prime Minister squarely responsible for failure to curb the rising prices in the country. Sinha also called for urgent reforms in the supply side management. His detailed interview would be on air on # BBV show ‘India Ka Agenda’ on Zee News on Saturday, September 7.
Retail inflation which is measured by CPI (Consumer Price Index) has hovered around double digit levels of 10 per cent for the last five financial years. Furthermore, the latest CPI inflation figure for the month of July came at 9.64 per cent. CPI is considered a better indicator of the cost of living and, hence, it is considered an appropriate measure of inflation for a common man in India.
Another measure of inflation is WPI, which represents the index of the average price of all commodities at the wholesale level. Thus, WPI reflects the inflation that is posed to the industrial sector of the economy. WPI is used by RBI for policymaking decisions. However, WPI has remained above the comfort zone of RBI (around 5 per cent) for the past few years.
There has been a widening gap between CPI and WPI. While WPI (headline inflation) gives food products a weight of nearly 15 per cent, CPI assigns a weight of nearly 50 per cent to the food basket.
Common people buy things according to the CPI. In sync with the push for transparency in price data, senior economist Rajiv Kumar, said, “In our country, inflation is because of supply shortage. In the history of modern India, perhaps it is for the first time that the food inflation has been above 10 per cent for more than 60 months.”
Former minister and BJP vice president Najma Heptullah during her interview to ‘Ek Nari Aisi Bhi’, to air on Zee News on September 4, said, “The true retail price inflation is never truly reflected in government data.” She held the current government’s policies responsible for the spiraling prices, especially of the food items.
Reiterating the view, economist Kumar added, “It’s unfortunate that our politicians don’t want to admit that inflation problem has risen because of their own mistakes. Politicians always blame that inflation is because of external conditions and powers.”
Suggesting ways to curb inflation, Sinha opined, “Today, we have more than 80 million tonnes of cereals lying in the godowns and the government should distribute some portion in the markets. This will eventually bring down the prices.”
In her ‘Jare Hat Ke’ # BBV interview senior Left leader Brinda Karat said inflation was a man made problem and the UPA government had deliberately weakened domestic agriculture and this had led to steep hike in food prices.